On June 6, 1966, Robert F. Kennedy gave a speech in Cape Town,South Africa, in which he said, There is a Chinese curse whichsays, May he live in interesting times. Like it or not, we live ininteresting times.

For those of us who develop and market insurance-processingsystems, these are interesting times, indeed. For those who buysuch systems, the times can be even more interesting. And, forthose who buy such systems without acquiring full functionality andfully-managed content, the purchasing process may not be all thatdifficult. But the results can be a curse.

First, lets re-visit an old debate: build vs. buy. (See CoreProcessing Systems: Why To Buy, January, 2002 TD). The fact isthere are good reasons for doing either.

Those who want to build are those that can; i.e., they have theresources (cash, time, and large IT departments); they havecomplexities they assume to be singular (legacy systems to support,customize, replace, etc.); they believe something about theirbusiness is unique (We could never buy a system for that!); theyfear theyll compromise too much with a purchased system; theybelieve their proprietary technology will give them a competitiveadvantage; and they have an innate fear of depending on a thirdparty, due to financial risk, timeliness to market, control, orwhat have you.

Those who want to buy tend to be those who cant build. Theyrelikely to be smaller firms (less cash and time, fewer ITresources); they perceive less risk in buying (We dont have thetechnical resources in-house. What will the ROI be? We wont haveanyone to blame!); they know they can touch and feel a purchasedproduct, analyze its effects on the business, and have anattributable source for ROI projections; and they understand the80/20 rule: 80 percent of the needed capabilities can be had out ofthe box, and the rest can be customized through applications andintegration.

Because both these situations can come up, the more criticalissue is not whether its more astute to build or to buy a system.Rather, the heart of the matter is the heart of the systemseffectivenessand the lions share of its functionality: itscontent.

Taking Charge

Heres something to ponder: As programming languages becomesimplified to the point that business people (as opposed to ITpeople) can develop, configure, and distribute products, the folksat the wheel may not fully understand what makes up much of theirinsurance products.

Needless to say, thats not an excerpt from How to Win Friendsand Influence People. Its also not as uncharitable as it sounds. Infact, most commercial insurance policies include rates, rulesand/or forms developed by institutions other than the insurerswriting the policies (ISO, NCCI, myriad state authorities, etc.).Companies use these baseline components because they are aggregatedfrom real premium and loss data provided by insurance companies allover the country. Most insurers use the various rates, algorithms,policy language, and forms in any combination they choose (customrates, factors, forms, etc.), then amend them in whatever ways theyalso choose. But for any one insurer, taking on the task ofrecreating the baseline data would be cost- and risk-prohibitive.And then theres the little matter of maintenance.

Many companies are re-inventing the wheel by tracking,programming, testing, and implementing the bureau-generated rates,rules, tables, and policy forms within their policy processingsystems. While some larger organizations may have the horsepower topull such loads, consider this: Last year alone, Insurity processed24,000 regulatory/bureau changes on behalf of its customers, forcommercial-insurance lines of business only. Those included rate,rule, and form changes; state and bureau reporting-requirementchanges; and all lines of business for all 50 states. That kind oflabor-intensity is not just a systems challenge, its ahuman-resources challenge. And its by no means an anomaly. Over thepast three years, there has been an average of 20,000 such changesper year.

Its hard to know which question to ask first How can companiesmanage all of this data? Why would they want to?

One more thought: It can get worse. Think of all the ways inwhich we can be bombarded with dataimaging systems, electronicinterfaces, data warehouses, Web links, database messages, etc.Without the proper resources and services, this is a case of agitawaiting to happen. Fail to keep up with it, and there are moretreats in storeinaccurate or inadequate pricing, cancellations,downturns in market share and profitability, non-compliance fines.Pass the Pepto, Sammyits gonna be a long night.

A Byte is Just a Nibble

The truth is the maintenance of that much data is not a softwarechallenge. All the bytes in the world wont help a bit if they donthave current content to chew. Were talking about acontent-management challenge. If systems providersin-house oroutsourcedarent also providing content management, all theprocessing power on the planet wont prevent bad rates, faultycoverages, and regulatory non-compliance. If, on the other hand,systems providers do provide content management, carriers can focustheir limited IT budgets on projects that help differentiate themfrom their competitors. Technology is having a major influence onthe ability to utilize content-management services. But it cantprovide intelligent content assessment and management.

With that said, processing and content do show the potential todovetail at some point. While older, proprietary systems andlanguages made interface difficult, new programming languages likeXML are allowing systems to share data through the adoption ofcommon tongues. Middleware platforms and Web services are breakingdown other barriers. These and other technological changes areallowing carriers to integrate regulatory-compliance applicationsinto their policy processing systems, to take advantage of thoseproviders who can help them manage the content of the thousands ofbureau rate/rule/form changes that affectif not determinetheirbusiness results.

Choose Wisely

When selecting a content management partner, you need only askthe same two questions you might ask before a first kiss: Have youever done this kind of thing before? And if so, with whom?

Beyond that, make sure your partner knows how to act after thefirst date. If insurance expertise isnt on the rsum, say goodnight.

Make sure your partner isnt afraid of commitment. If the dealstarts to feel like a buy and bye-bye proposition, move on.

Make sure your partner knows a little something about long-termrelationships. If a brief history and a dubious balance sheet haveyou thinking your suitor wont be aroundlet alone respect youin themorning, it wasnt meant to be.

Whatever you do, youll make your times significantly lessinteresting if your search for an insurance-processing systemcenters on full functionality and fully managed content. The searchmay be difficult, but it need not be a curse.

Dorrie Pighetti is vice president and chief insurance officer atInsurity (www.insurity.com).Tony Reisz is Insuritys vice president of sales, marketing, andbusiness development.